How does the Washington Franchise Investment Protection Act affect buy-back provisions for a Chesters franchise?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Certain Buy-Back Provisions.
Provisions in franchise agreements or related agreements that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise agreement without the franchisee's consent are unlawful pursuant to RCW 19.100.180(2)(j), unless the franchise is terminated for good cause.
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- Fair and Reasonable Pricing. Any provision in the franchise agreement or related agreements that requires the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful under RCW 19.100.180(2)(d).
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to the 2025 Chesters FDD, the Washington Franchise Investment Protection Act has specific implications for buy-back provisions within franchise agreements. The Act states that any provision allowing Chesters to repurchase a franchisee's business during the franchise term without the franchisee's consent is unlawful, unless the termination is for good cause. This protection is codified under RCW 19.100.180(2)(j). This means Chesters cannot arbitrarily decide to buy back a franchise location during its operational term if the franchisee does not agree, safeguarding the franchisee's investment and operational control.
This provision ensures that Chesters franchisees in Washington are protected from potentially unfair buy-back scenarios. Without this protection, a franchisor could theoretically force a franchisee to sell back the business at an unfavorable price or under duress. The "good cause" exception allows Chesters to terminate and repurchase the franchise if the franchisee breaches the agreement or fails to meet performance standards, providing a balance between franchisor and franchisee rights.
Furthermore, the FDD highlights that Washington law takes precedence in case of conflicting laws. Specifically, the Washington Addendum to the Franchise Disclosure Document states that the provisions of the Washington Franchise Investment Protection Act, chapter 19.100 RCW, will prevail in the event of a conflict of laws. This reinforces the importance of understanding Washington state law for any Chesters franchisee operating within the state, as it supersedes any conflicting terms in the standard franchise agreement.